Bill Ackman Is Pioneering the ‘Buy-5-Get-1-Free’ Hedge Fund IPO

Bill Ackman’s stock market inventions aren’t always as successful as they are creative. The hedge fund entrepreneur’s latest innovation — giving free shares in his firm to investors who buy into his new publicly traded fund — has a better chance of flying.

A backdrop of war in the Middle East makes now look like a terrible moment to launch an initial public offering of any kind. To the contrary, argues Ackman: For investment companies, market volatility creates opportunity because high-quality stocks are caught up in the selling. This, the thinking goes, is an ideal backdrop to raise a new “closed-end” fund. Hence his creation of Pershing Square USA Ltd. (PSUS), which will list on the New York Stock Exchange and invest mainly in dependable North American large-cap stocks.